A central role for local government? The example of late Victorian Britain

Simon Szreter | 02 May 2002

Executive Summary

Britain in the 1860s, as in the 1990s, exhibited rising social inequality, gross urban poverty, low status public services and local government, after a generation of free market ideology.

Between 1865 and 1875 the prestige of local government was revolutionised and a model for popular, effective public services was developed by provincial business and community leaders.

The period 1870-1914 experienced a flowering in British civic activism and a massive reduction in urban poverty, with local government expenditure outstripping central government.

Paradoxically, central government in 2001 can only re-invigorate civil society and reduce poverty by devolving its own powers and resources to a revived elected local democracy.

New Labour are, rightly, very wary of history. They feel the Labour Party's own recent history is an electoral minefield. However, if they are prepared to look further back in time, before the Labour Party had even come into existence, they will find an extraordinary treasure-chest of parallels and analogies to inspire them. The period I am referring to covers half a century, 1865-1914, though I am particularly interested in just the first ten years, as this seems to offer the closest analogy to the situation in which the New Labour government finds itself today.

Tony Blair and Gordon Brown both recognise that two decades of running society according to the prescriptions of the free market and economic liberalism have caused the resurgence of a truly significant problem of poverty and social inequality. This affects a worrying 25% of the nation's children growing-up in households with incomes below half of national average incomes and also has quite unpalatable health consequences for many adults and for the aged. On personal, moral and ideological grounds they would like to do something really substantial and lasting about this. However, the loyalties of the domestic electorate, or at least the 60% or so who vote in national elecitons, are considered to be highly sensitive to any significant increases in demands on their pockets, even though they may agree in a general and moral sense with the goals of removing poverty in Britain, particularly for children, and of giving the disadvantaged better opportunities for education, training and a decent environment to live in. Can the electorate be persuaded that we should and that we can turn these professions of good intentions into a reality? Can British society find the resources of moral courage and enterprise to improve itself?

History gives a resounding 'yes' to these questions. The leaders of British society in the 1860s faced a very similar predicament. The previous decades had seen economy and society increasingly run on radical free market lines, as Britain became the first industrial nation in the world. This was the era of the original ideology of the free market and of rolling back the state. It was so dominant that Prime Minister Gladstone still cherished the goal of reducing the nation's income tax to zero. The professions and the civil service were all being reformed and made properly competitive in the name of efficiency and merit. Social security spending had been slashed and 'scroungers' persecuted under the rigorous New Poor Law of 1834, reinforced with a central government 'crusade' against outdoor relief in the late 1860s. There had been far too little expansion of hospital beds to cater for the apparently inexorably increasing demographic demands. Provision of education for the great majority was acknowledged to be in a parlous state and way behind most of our international competitors. But there was still no preparedness in central government to address expensive questions of resources, such as a real increase in the number of teachers. All the talk at the beginning of the 1860s in the field of education, for instance, was couched in terms of getting the basics right (the famous '3 Rs' of Reading, 'Riting and 'Rithmetic), a national curriculum (the 'Revised Code' of 1862 famously reviled by Matthew Arnold), focusing on the delivery of standards with inspection of teachers and payment by results (the original usage of this term!).

For this generation, getting workers and goods in and out of congested town-centre workplaces was also a nightmare, as expensive road-improvement programmes had been put-off year after year. Local government in most towns was in an almost farcical state of low aspirations and low standards. Where once-proud corporations led by the town's leading men of affairs had put through great town improvements such as widening roads and building hospitals in the eighteenth century, municipal administration had now fallen into a mean state of bickering and 'do-nothingism'. This was dignified as the policy of 'economy', with local councillors competing to promise a mean-minded electorate the lowest rates bills.

Civic society and local government transformed

If all this sounds strangely familiar, it is the story of what happened next which is so interesting for New Labour to ponder. In just ten years, from 1865 to 1875, a revolution in thinking and policy occurred. By 1875 the status of municipal administration had been so transformed that in a big city like Birmingham its leading big businessmen were queuing-up to enter the hustings for election as local councillors, at which point they would be giving their precious time to the demanding tasks of overseeing the city's future. The managing director of the West Midlands' biggest screw manufacturer (the future G.K.N.), the young Joseph Chamberlain, had just been elected Mayor for the third consecutive year, on the back of a three-year whirlwind programme of ambitious municipal spending!

The very word 'economy' was rapidly re-invented. Chamberlain lectured audiences of hard-nosed Brummie businessmen and ratepayers on the 'false economy' they had practised for a generation. He informed them that 'true economy' lay in spending and investing today in the homes, streets and schools of their work-forces and their families in order to enhance workers' productivity, to beautify and civilise the urban environment and to build-up the town's long-term prosperity. He himself paid over the odds to his own workforce (i.e. he was a practitioner of 'efficiency wages' before economists had invented the term) and his company got the results that counted in the market place.

Over the rest of the century, the new 'civic gospel' of municipal pride and ambitious improvements rippled out all over the country from its nonconformist Birmingham epicentre and from the separate centre of municipal innovation of Glasgow in Scotland (which was continually vying with Birmingham for second-city status throughout this period). The big businessmen and professionals of other large cities like Manchester, Sheffield and Leeds began to emulate Birmingham's and Glasgow's successful improvements in a healthy spirit of keen rivalry. By the end of the century even many smaller and more insular towns like Wolverhampton, West Bromwich, or Wakefield had followed suit. Cities embarked on programmes to light and pave all their streets, to supply all their homes with plentiful pure water from the hills, to excavate costly arterial sewer systems and connect all the working-class houses up to them, at last equipped with W.C.s and running water. These were all very expensive investments paid for out of rates and taxes, which the electorate previously simply would not stomach. Even the proverbially 'do-nothing' ancient parish vestry local authorities of Victorian London eventually fell prey to the new spirit of civic government. Their key functions were integrated into the powerful new L.C.C. created in 1889 to give the capital a governing body capable of providing strategic direction, improvements and services for its long-suffering residents.

The results, in terms of poverty and inequality, or 'social exclusion' as we have chosen to call it today, were spectacular. The nation's death-rates had failed to improve for a generation during the mid-nineteenth century and the industrial inner cities had had atrociously high levels of mortality due to unregulated overcrowding and insanitary streets and housing. But from 1870 national death rates began to fall consistently decade after decade, including even those of the inner cities. Although the revolutionary expansion in municipal services and the move towards comprehensive public health measures cannot be attributed with the whole of the responsibility for this dramatic and sustained improvement in the lives of the urban poor, it was certainly an essential part of the story.

The provincial sources of civic revival

So how did this happen? What was the political magic? The civic gospel, preached from the early 1860s, was an overtly moral message, and one which challenged its audience to think again carefully about what they were really doing with their lives. It was addressed personally each week from the pulpit to the more successful individuals in the community as they gathered together in worship and reflection in their fiercely independent nonconformist 'clubs' or chapels in Birmingham. What was wealth-creation and money-making actually for? What was its value to wealthy individuals if they were surrounded by squalor, misery and suffering among their fellow beings? Could not this wealth be used to improve the lives of the poor around them and to give real opportunities to their children? Should they not aspire to create cities to live in which were graceful and uplifting to the soul? Inspired by similar sentiments, the Pre-Raphaelite artists of this generation had already produced idealised images of life in the Italian Renaissance city-states (canvases which now hang in many of our leading cities' galleries). These proud city-states and those of ancient Greece were taken to offer models of graceful living in a truly civilised urban community.

Secondly, there was a recognition among those listening to their consciences sitting each Sunday in their pews in Birmingham, Manchester, or Liverpool, that private charity and philanthropy was just not enough. They had already tried for a generation to 'civilise' their towns and ameliorate poverty in this way, in particular pinning their hopes on the long-term powers of education to raise the children of the poor. But they were now realising that good intentions, without also being prepared to deploy truly major resources from the community, would never more than scratch the surface. Unitarian, Quaker, Baptist, Congregationalist and even Anglican networks in each city were coming to the acknowledgement that it was time to think big on educational provision and to follow some of our more successful continental rivals like Germany, Holland and France in funding educational resources on an altogether grander scale. The only way to really break through the repeated generational cycles of families and whole districts trapped in poverty was to overhaul completely the scale of provision, with a community-wide commitment to fund and administer education everywhere from the local rates. In the event, as a result of a successful national campaign to bring this about, from 1870 onwards central government itself came increasingly to support the local rates for the provision of this new universal education system on a national basis. Through sincere reflection on what they had learned from hard experience, these late-Victorian provincial, urban neo-patricians dared to think big on the problem of education. They were also drawn further, to realise that problems of education, poverty, housing and environment were all linked and that the key to making a serious attempt to solve them lay in the city taking its destiny into its own hands through an altogether more active and dynamic form of municipal self-government.

Financing the transformation

During the period 1870-1914 all of Britain's cities made a whole series of colossal and ever-increasing investments in improving their environments, their housing stock, their social and health services, all of which benefited the poorest sections disproportionately. This all required large amounts of public funding. The practical success of the new municipal activism rested on a number of significant innovations in public finance and here again Joseph Chamberlain, as a financial entrepreneur, was a crucial figure. Two devices in particular were important: long-term loans and a form of indirect taxation 'by stealth'. It was important for the largest municipalities that they gained the permission of Parliament to take-out big loans at favourable long-term rates from the London money-markets, on the security of the city's rate-base. This postponed and therefore distributed more fairly and inter-generationally the up-front costs of massive capital improvements, thereby minimising the immediate fiscal pain for the current generation of ratepayers, whose political assent (expressed in regular elections) was necessary for these much-needed but expensive schemes to go ahead. The second innovation, indirect taxation, took the form of using some of these loans to buy-up or build local natural monopoly services such as gas and lighting, electricity, transport and trams and water supply and then run them at a moderate profit, which was used to fund local services or simply to maintain the rates at a politically acceptable level. Local rates did eventually rise but by then the cities had their vital improvements.

Local government innovates, central government facilitates

One other principal source of increased revenue for municipalities was in the form of subsidies and subventions from the central Exchequer, derived principally from national income and consumption taxes. The relationship between local and central government which was entailed is a particularly instructive part of this historical story for New Labour to meditate upon. It illustrates the effectiveness of real and thoroughgoing devolution. As the leading constitutional historian, H.J. Hanham has put it, 'the extent of local self-government during the nineteenth century appears stupefying. As a matter of principle Whitehall thrust every type of administration on to elected local bodies'. Central government tended to coax local authorities to adopt best practices, occasionally using the stick of mandatory legislation as with the 1870 universal education act, but more generally offering financial carrots, usually by partly defraying the costs of new measures (through 'grants-in-aid'), but leaving decisions on adoption to local councillors and their electorates. Local pride often resulted in rivalry between towns to ensure that they benefited from these central subsidies. Furthermore, it is extremely relevant to note that when central government did legislate, it was almost always an attempt to generalise throughout the country a practice that had already been developed and thoroughly road-tested on the initiative of a particular locality. This was true for instance of public housing (Glasgow), free school meals (Birmingham) or the notification system for monitoring infectious diseases (Bolton).

The direction of flow of new ideas and policy initiatives was not predominantly from the centre- Westminster-based ministries, civil servants and London-located think-tanks- to the provinces, but rather a two-way one, in which individual local authorities faced with concrete problems had the self-confidence, the resources and the freedom to pioneer new approaches, which, when seen to work, were subsequently generalised by the centre. With power and responsibility genuinely devolved by the centre to local authorities and with substantial revenue-raising powers, both dynamic local businessmen and ambitious public service professionals were equally drawn to serve their local communities with energy and initiative, knowing they could really make a difference. Most tellingly, over this period when such an effective attack on inequality and urban misery was mounted, 1870-1905, government expenditure doubled from 3% to 6% of G.N.P. (having been constant before 1870 at about 3% since 1820). But it was mainly local government which was spending these substantially increasing real resources, with its share of all forms of government expenditure rising from 32% in 1870 to 51% (an all-time historic peak) in 1905.

How different all this is from the history of local government and its relationship to the centre during the last several decades! Mrs Thatcher's government began a damaging down-grading of local government's functions and its status, which has proceeded on such a scale that it shows up clearly in the national spending statistics. Thus, quite to the contrary of the pattern which prevailed when so much constructive work was done on behalf of the poor and the environment in the nation's cities between 1870 and 1905, since 1979 local government expenditure has been cut back from 28% of total government expenditure to under 24% by 1998/9. This is testimony to the policy trend whereby the central state has increasingly monopolised the development and even implementation of all significant new policies from the centre. Local government has been consistently attacked and demeaned and its powers to innovate have been restricted and capped, leaving only a dogged ingenuity in adjusting to cuts as the principal sphere for initiative. Whereas local government raised about half of its own funds in the pre-Great War era, as much as 85% of all local government expenditure is now provided by central government-and this imbalanced relationship is used to ensure that the provinces only do what the centre permits.

An important lesson from late Victorian history is that it is an entirely self-defeating strategy to deprive elected and accountable local government of status, independence and initiative. The enormous geographical diversity of problems, which inevitably occur as economies unevenly grow and as societies change, and the devising of effective ways to deal with them, can only be properly understood and road-tested with full, consistently applied and properly-resourced local knowledge and initiative. New Labour's encouragement of elected executive mayors may be a step in the right direction but, in isolation, it may merely attract mavericks and self-publicists. What is needed, instead, is the facilitation of the right conditions for a more general enhancement in the culture of local civic pride that will appeal to a wide range of talented persons from many walks of life. For this to happen, people with vision need to be able to believe and to see that devoting their energies to local leadership is likely to make a real difference to their communities. Another of the government's initiatives, 'public-private partnerships' has too often appealed only to the commercial self-interests of one section of the local (or even not so local) community. Along with a continuing regime of cuts (euphemised as 'efficiency gains'), this has only further constrained the capacity of local authorities to decide for themselves how they act.

Genuine fiscal powers and an expanding sphere of discretion and autonomy needs to be returned to elected local government for an encompassing culture of local civic power and pride to flourish and to attract persons of vision- not merely acumen- to serve. The latest government idea is to permit the establishment of elected regional governments in England. But this same government has spent years fighting doggedly to prevent the only extant such regional government- the London Assembly- from exercising any serious autonomy over the crucial question of the design and funding of the capital's transport system. This suggests that New Labour may want to change but, after decades of increasingly centralised direction and manipulation, those at the helm of government find it very hard to kick the habit. The reinvigoration of elected local- or regional- government will require that the centre permits risks, even what it sees as 'mistakes', to be pursued. Though it may continue to monitor, shame and coax, the centre must give-up some real power, autonomy and resources.

Democracy and participation

Finally, one additional historical lesson must be mentioned- an energising political catalyst. The sustained revolution into municipal activism in the last third of the nineteenth century was encouraged by a change in the electoral constituency, which altered the incentives, both local and national, for politicians in their competition for votes. From 1835 until the late 1860s local councillors had become increasingly recruited from the shopkeeper class, the same set of small-time property-holders who held most of the votes and who exercised them in favour of minimal local taxation. But from 1867 through to 1884 a sequence of Parliamentary acts brought an ever larger proportion of the upper, 'respectable' working-class- and even some women- onto the electoral rolls, swamping the votes of the 'shopocracy'. These men were persons who, as renters rather than owners of property, never personally received rate-bills but whose families certainly had an interest in voting for ambitious programmes for improving the urban environment and services. The lesson here is that in order to benefit electorally from doing what is morally right for the poorer sections of society, it is only politically sensible (and, in the last analysis, it is only philosophically consistent in a liberal democracy) to ensure that those previously socially excluded groups have the opportunity to express their political support for what is being done on their behalf. The government has experimented with easier ways to vote but there is much more to be done.

But aren't we already a full democracy? Actually we've become rather complacent about this and, as falling turnouts show, we are certainly not very participatory- especially in local elections. There are a number of ways in which New Labour could legitimately reform Britain's current electoral system. Firstly, we could follow the Australians and legislate compulsory voting. Perhaps this could first be trialled in local government elections. The question of how to sanction this might encourage some creative thinking. Instead of a fine, a flat-rate payment of 20 to each voter as the incentive to vote might be considered to avoid further penalising the poor, while the rest of the citizenry could be encouraged as a point of honour to donate their payment to the good cause of their choice; another bright idea I've heard is to give a free National Lottery entry ticket to each voter who turns-up!. Secondly, the voting age could be reduced to 16 in consistency with the age at which citizens are currently deemed sufficiently responsible to start bringing up the next generation. Children are disproportionately found in the households of the poor. Either or both of these measures would have the effect of producing a fairer electorate, in empowering with votes a currently socially-excluded and under-represented section of the community, whose absence of voice biases the political system and the incentives of politicians against measures which would be in their interest, just as was the case with the under-represented interests of working men and their families, as opposed to small property-owners, before the late 1860s. Thirdly, the novel, participatory budget-setting practices of the southern Brazilian city of Porto Allegre could repay careful study. It has been at the centre of a revival in effective municipal government in a country renowned for the opposite.

Civic morality and politics

New Labour have proved themselves masterly at 'communication' and in getting the media and public opinion to see things their way. It would be interesting to see the government putting this expertise behind the kind of politically-imaginative and constructive campaign that the civic gospel represented, and which elected Mayors like Chamberlain were able to convert into new and bold, real and concrete policies for the poor and the environment, which were not automatic vote-losers because of the positive climate of public opinion that had been created. The high-minded Noncoformist preachers of the civic gospel, bringing home truths to the nation's urban elite, had a clear and serious moral and political goal. Their aim was to change people's minds, including rich and powerful people. They were not afraid to inform these people that there was something morally important missing from their lives. Not content simply to lambast them for this, they were intent also on awakening a sense of excitement and interest in what they might do about this.

Their aim was to convert the privileged from a socially-complacent, self-centred contentment with striving merely for their own and their immediate family's personal 'salvation', comfort and satisfaction. This is what the morally dangerous ideology of the market and the fiction of 'consumer sovereignty' tells us all to believe-in. Although the overtly religious discourse of the nineteenth-century may be alien to many of us today, the issue remains the same. Is it really the most important thing in life to remain a perpetual teenager, anxiously obsessed with the self, or (in a partially adult version of the same solipsistic attitude) one's immediate family? The contemporary, aspirational cult of 'lifestyle' is the insidious version of this, inciting citizens to focus their energies and emotions compulsively on the accumulation of as much personal wealth as possible in order to spend it all on the items and activities required by their 'lifestyles'. Of course, this is not an absolute evil! The issue is balance. The new message of the civic gospel was that to pursue this path, alone, was self-centred negligence. Public and civic engagement with improving and contributing to the lives of one's fellow citizens was an activity of far higher moral worth, especially when so many were in such obvious need of assistance to improve their lives. The most powerful and systematic way of engaging in this honourable activity was seen as giving one's services to the institutional administration and improvement of one's locality and the poorer and more unfortunate elements within it.

The core of the civic gospel message, which New Labour need to revive fully, in an appropriate twenty-first century form and language, is that to engage upon this public and giving activity, as more than just a set of disconnected acts of individual 'charity' (as when in our living-rooms we sign off a cheque in response to a charity ad on the T.V. screen) is what truly counts. New Labour need to transmit unambiguously the 'message' that public service to specific communities, not simply to 'the nation' or 'the world'- abstractions which permit the self-delusion that one is doing something worthy- and not personal or dynastic wealth accumulation, is what really counts as high status and as the most honourable and noble activity in our society. The wealthy should be banned from making financial contributions to political parties and permitted only to give their time- this is the democratic contribution, which we can all make in common. It is important that we do not get side-tracked into a false, moralising form of patronising charitable activity by self-appointed and self-congratulatory associations of wealthy citizens. The whole reason why mid-nineteenth-century men of the cloth, who were deeply involved with charitable and philanthropic activity of that sort, turned, instead, to preach the civic gospel of collectively-organised and funded municipal activity, was that they had come to realise the severe limitations of this approach, when faced with the systematic and persistent problems of poverty and inequality in a market-oriented economy. As demonstrated by studying the rhetoric and language of Chamberlain, who continually equated the work of the public administration of a town of any size with that of running a big business, this can be done without in any way denigrating the values and practice of the successful business community. Indeed, their active participation is vital. But a new citizen's gospel needs to be preached, which places the virtues of business efficiency, 'competitiveness' and satisfying 'personal lifestyles' in their proper and subordinate places, within a truly moral and ethical set of priorities, so that they are not permitted to continue to function, by default, as false idols.

About the author

Simon Szreter is a Fellow of St John's College, Cambridge and a lecturer in the Faculty of History, University of Cambridge. He is one of the founders of History & Policy and has published widely on demographic history, public health and the history of social science, including Fertility, class and gender in Britain 1860-1940 (Cambridge 1996). srss@cam.ac.uk.

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